Tax & Legal News in English | November 2024

Deduction of family home trips

Family home trips can be tax-deductible if there is a work-related double household. Costs are deductible for weekly trips for married individuals and monthly trips for singles, limited by the highest commuter allowance. Expenses must be apportioned if related to tax-free foreign income. Employers covering more than one trip per month during foreign assignments disqualifies the tax-free status. Special rules apply for combining with commuter allowances and when receiving tax-free income.

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Working Holiday programs in Austria for US citizens 

A Working Holiday Program is a bilateral agreement between two countries. It allows short, temporary employment contracts to be spontaneously entered into during the holiday stay. The duration of the program varies between six and twelve months depending on the agreement concluded between the two countries. The respective visa must be applied for at the Austrian embassy in the home country.

At the beginning of 2024, the program was also concluded between Austria and the USA. Young US citizens can now in principle work in Austria without additional work permit and thus also co-finance their holiday stay. In such employment relationships, an Austrian employer must comply with the wage and working conditions applicable to the respective employment as well as the social security regulations.

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Austrian Tax Appeals Court on the requirements for write downs of participations

According to the Austrian Tax Appeals Court (BFG), the submission of a company valuation in accordance with scientific methods, in particular taking into account the KFS/BW1 expert opinion, is not mandatory in every case for a write down of participations for tax purposes. This is especially not the case if the devaluation of the participation in the event of insolvency can also be sufficiently substantiated with other relevant documents.

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Breaking news: VAT in the digital age (ViDA)

The proposal for a directive to amend the VAT System Directive on ‘VAT in the Digital Age’ (ViDA) was unanimously adopted at the Ecofin meeting on 5 November 2024. This contains regulations for the platform economy, reporting obligations and electronic invoicing as well as for standardized EU VAT registration. The member states now have some time to implement the new regulations.

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ECJ confirms supply chain for e-charging of electric vehicles

In its latest case law, the ECJ has commented on the VAT treatment of e-charging of electric vehicles and distinguishes this from the previous rulings on fuel card transactions. According to the ECJ, three-person relationships may constitute a supply chain and therefore also a fictitious chain transaction by way of an implicit commission transaction. However, whether a commission structure exists must be decided by the national court. Follow-up questions regarding the categorization of the middle party as a reseller, the location of the charging station, the existence of an independent supply in relation to the service elements or the existence of an electronically supplied service in B2C cases remain unresolved.

There are also new regulations for displaced minors from Ukraine under 18 years of age. These regulations are intended to enable them to receive continuous training as a prerequisite for successful integration into the Austrian labor market.

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NEHG: Submit applications for relief measures by November 30, 2024

In order to reduce greenhouse gas emissions, the National Emissions Trading Act (NEHG) 2022 was introduced on October 1, 2022. The aim of the National Emissions Trading Act (NEHG) 2022 is the gradual pricing of energy-specific greenhouse gas emissions that are not currently covered by the European emissions trading system. However, energy-intensive companies and industries can apply for a relief measure for the resulting additional burden. This application must be submitted to the National Emissions Trading Information System (NEIS) by November 30, 2024.

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Netherlands – a groundbreaking turnaround in climate protection proceedings

The Federal Ministry of Finance (BMF) has published information on tax measures in response to the catastrophic damage caused by the recent floods and landslides. This information is updated on an ongoing basis. It includes, among others: Extension of deadlines, payment relief, extension of the deadline for the reduction of advance payments for income tax and corporation tax, information regarding instant deduction of expenses in connection with disaster damage etc.

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Inflation Adjustment Law 2025

In 2018, the Dutch environmental protection organisation Milieudefensie had taken legal action against the British company Shell, which at the time was based in the Netherlands. The UO complained that Shell, as the largest polluter in the Netherlands, should comply with the Paris Agreement and reduce its CO2 emissions. Shell was violating the fundamental rights of the Dutch population to life and privacy through its CO2 emissions and was therefore liable for damages.

The Dutch Court of Appeal has now decided that Shell should indeed  contribute to climate improvement, as it has been doing so far, but that this does not result in an obligation to pay compensation.

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Revolutionizing Employee Participation: Austria's FlexCo Shares vs. Phantom Shares

Start-ups play a key role in shaping the modern economy, and Austria has introduced a new corporate form, FlexCo, under the FlexKapG, to support this sector. FlexCo offers a new type of shares called “Unternehmenswertanteile (UWA)”, which provide an alternative to traditional virtual employee participation models like Phantom Shares. While Phantom Shares gave employees a stake in company´s success through contractual agreements, they did not offer ownership or voting rights and were taxed progressively, often leading to high tax burdens after successful exits. With the introduction of Sec 67a EStG (Austrian Income Tax Act), UWA shares bring clear tax advantages, as taxation is delayed until the shares are sold, with 75 % taxed at a flat rate of 27,5 %. However, these benefits are limited to certain companies, and only actual shares qualify, no virtual shares like Phantom Shares. Although UWA shares can have significant tax advantages, virtual shares offer greater flexibility, allowing for more customizable payout conditions and fewer corporate obligations, making them attractive in specific scenarios as well. 
 

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The FIFA transfer system in the context of EU law

The European Court of Justice's (ECJ) judgment was based by the case of a French footballer whose disputed departure from the Russian club to which he was contracted in 2014 resulted in a fine of more than ten million euros from FIFA, in which the club that wanted to sign the player in the future was to participate. In this context, a further transfer of the player to a Belgian club failed and the player filed a complaint against FIFA. The ECJ subsequently ruled that this restricted the player's freedom of movement of labor as an employee and constituted also a violation of European competition law.

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BFG: Taxation of a pilot resident in Austria under the DTA Malta

In its ruling of 24 July 2024 (RV/7102502/2024), the Tax Appeals Court had to decide on the taxation of a pilot resident in Austria. In this case, the Court had to determine whether the income of an Austrian-based pilot of a Maltese airline should be subject to taxation or exempted in Austria. The Tax Appeals Court ruled that Austria is not allowed to tax the pilot’s income. As an appeal was lodged, the final decision of the Administrative High Court remains to be seen.  

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E-invoicing obligation in Germany from 2025

Austrian companies that are registered in Germany purely for VAT purposes (without a fixed establishment) are not affected by the new rules on e-invoicing in Germany. However, if an Austrian company has a fixed establishment for VAT purposes in Germany, the regulations regarding e-invoicing are applicable to domestic B2B transactions. The possibility of receiving e-invoices should be ensured by affected companies from the beginning of 2025. Even if there are transitional periods for the issuance of e-invoices, measures for the incorporation of e-invoicing into the existing system landscapes should be planned immediately and consequently implemented – if they have not already been taken. 

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